UBS won't pay in Enron deal

NEW YORK - A Swiss investment bank won&#39;t pay anything to acquire Enron Corp.&#39;s energy trading business, won&#39;t assume any of the troubled company&#39;s debts and will share a third of its profits with Enron and its creditors, under terms of a deal made public Tuesday. <br> <br> UBS Warburg, a division of Switzerland&#39;s UBS AG, and Enron will seek approval of the deal with the Federal Trade Commission and the Justice Department, according to the documents filed Tuesday in U.S. Bankruptcy Court. <br> <br> The terms of the deal to rescue Enron Corp.&#39;s trading operations were to have been released late Monday, but were delayed because officials had to iron out the final details of a complex deal negotiated in less than a week. <br> <br> The plan to revive Enron&#39;s trading business calls for UBS Warburg to acquire the unit without paying any cash up front, said Mark Palmer, an Enron spokesman. <br> <br> Enron and its creditors will initially get 33 percent of the new business&#39; pretax profits and UBS Warburg the rest, the documents indicate. UBS Warburg can later gradually buy out those profit-sharing rights. <br> <br> UBS Warburg is expected to lease Enron&#39;s Houston office and employ about 800 of the division&#39;s workers, Palmer said. <br> <br> Enron&#39;s energy trading business generated about 90 percent of the company&#39;s $101 billion in revenue in 2000. The deal does not include existing contracts Enron has to supply power, valued at between $6 billion and $7 billion. <br> <br> Enron filed for bankruptcy late last year. It collapsed amid revelations of complex partnerships used to keep billions of dollars in debt off its books and mask financial problems so it could continue to get cash and credit to run the trading business. <br> <br> UBS Warburg won the bidding for the trading operation, beating out Citigroup Inc., a large Enron creditor. <br> <br> A creditors&#39; committee approved the deal, but other Enron creditors have questioned it, saying they want more information about how the agreement was reached and how the proceeds will be allocated. <br> <br> The deal must be approved by Judge Arthur J. Gonzalez. A hearing is set for Friday. Dissatisfied creditors will have 10 days to appeal Gonzalez&#39;s ruling. <br> <br> Before its collapse late last year, Enron was the world&#39;s largest energy merchant and the nation&#39;s seventh largest company by revenue.

http://accesswdun.com/article/2002/1/200141